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Copyright 2017

Tuesday, July 18, 2017

NEW CARS OUT OF REACH FOR MANY HOUSEHOLDSMEDIAN INCOMES LOW IN MOST METROS New vehicles cost about the same everywhere—give or take differences in taxes and destination charges—but incomes vary a lot by location. Analysis by Bankrate.com finds that a median-income household can only afford the average-priced new car in one of the 25 largest U.S. metropolitan areas, according to a new Bankrate.com report. That one metro is Washington, DC. The study adhered to the “20/4/10” rule: a 20% down payment, a four-year loan and principal/interest/insurance payments comprising 10% of a household’s gross income. If a median-income HH follows those guidelines, they can afford less than half of the average new car price in six of the 25 surveyed markets. Miami/Fort Lauderdale/West Palm Beach came in last. In that metro, a median-income household can afford to buy a car worth just $13,577 (the average new car would cost $35,368 including local sales taxes). “The main point of this research is to illustrate how Americans are having to overextend themselves to pay for a new car at today’s prices,” says Bankrate.com analyst Claes Bell. “Low- and middle-income households are having to stretch loan terms to six or more years and/or spend huge percentages of their paychecks to afford reliable transportation, and it’s very difficult to get off that hamster wheel of debt once you’re on it.” In D.C., where the median income of nearly $100,000 is about twice as high as in South Florida, a median-income household can afford to spend $37,223 on a car ($697 per month). But remember, that’s only one car for the family. After D.C., average incomes are next highest in the San Francisco metro—but we would caution that the Bankrate analysis doesn’t adjust for that market’s high housing costs. So, in theory a median-income household could afford a $631 per month car payment, which would cover a new vehicle priced at $32,286—if they actually have $631 to spare after paying their rent or mortgage and basic living expenses. Boston checks in with a median-income family being able to buy a new car for $30,863 with a $592 monthly payment. Seattle is at $26,771 and a $532 payment. Completing the top five is Minneapolis-St. Paul at $26,606 and $502 monthly. At the other end of the scale, after Miami, 24th place goes to Detroit, where a median-income family can only afford a $13,913 car with a monthly payment of $273. USA Today, using Kelley Blue Book data, reported that only three small cars have MSRPs that low. Tampa checks in at $14,189 and a $268 payment; Orlando $15,902 and $309; and San Antonio $16,433 and $324.

ADVERTISER NEWS The major regional banks will be reporting second quarter results this week and Pittsburgh-based PNC was among the first. Profit rose from $989 million in the quarter a year ago to $1.097 billion this year with net interest income up 5% due to higher loan yields and balances. The important net interest margin metric—the difference between what a bank pays to borrow money and what it gets for the money it lends out—rose to 2.84% from 2.77%

in the first quarter and 2.70% in last year’s second quarter……Hyundai dealers will get a new entrant in the hot subcompact crossover segment with the Kona and Automotive News reports the model will be the first of a “new design language” for future Hyundai vehicles that will all get a new look. The 2019 Santa Fe Sport that will also get to dealers next year

will have some similarities to the new Kona look with its grille and headlight setup……J. D. Power’s Valuation Services reports that wholesale depreciation of used cars and trucks was at “historically normal” levels last month at a 2.2% average and it predicts used prices will drop about 6% this year compared to a 4-point loss in 2016……After Bloomberg reported the True Value Company could be looking for a deal, others in that retail segment appear to be interested. Cross-town Chicago competitor Ace Hardware says it would be interested but its CEO said Ace “was specifically precluded from making a bid to purchase True Value, which is unfortunate.” Meanwhile Fort Wayne-based Do It Best said “We are certainly considering the opportunities potentially available with our competitor.” True Value currently counts 4,392 stores in its co-op, which is owned by the owners of those stores……Ross Stores, which had said it had plans to open about 90 new stores this year, reports it’s opening 21 Ross Dress for Less units and seven dd’s Discount locations in June and July in both new and established markets, with emphasis on the Midwest. It says the Dress for Less chain is the largest off-price apparel group of stores with 1,384 stores in 37 states.... (Continued on Page 2)

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BUSINESS BYTES We’ve been keeping an eye on the food-at-home prices reported by the Bureau of Labor Statistics as the cost of food has been playing a major part in results coming from both the supermarket segment and the restaurant business. Now Supermarket News is reporting food price deflation moderated last month to just 0.1% below the totals reported in June, 2016. Nonalcoholic beverages and dairy products were among the categories showing some of the bigger price drops, although poultry, fish, eggs, and beef have started to trend towards higher pricing than last year. The food-at-home index has now been deflationary

for the last 19 months, while food-away-from-home (restaurants) showed a 2.2% increase in pricing versus last June. If your local automotive dealer client is watching his expenses closer than normal these days, part of the reason may be that Selling, General & Administrative expenses are up more than double digits so far this year. The National Automobile Dealers Association’s Dealership Financial Profiles says the average dealership has spent $2.517 million so far this year in

SG&A expenditures, as 11% increase compared to $2.268 million after last year’s first five months. Electric utilities are advertisers in many markets, often choosing to utilize institutional campaigns to enhance their image with consumers. The annual study from J.D. Power concerning customer satisfaction in that industry shows improving numbers for the sixth consecutive year, with the category reaching 719 on Power’s usual 1,000-point scale, a significant 39-point improvement over last year’s study. The major contributors to the big jump were a 39-point increase in customers’ perception of power quality and reliability and a 48-point improvement in the price factor. Price satisfaction increases based on ease of understanding pricing, total monthly cost and “fairness of pricing.” “The utility industry has begun to fully understand the importance of customer satisfaction over the past several years and now have many dedicated leaders and teams focused on improving the customer experience,” Power’s director of the energy practice said. “A challenge we continue to see, however, is that the pace of implementing satisfaction improvements at utilities can be slower than in other industries.”

ACCOUNT ACTIONS With Stonyfield in the midst of being sold by Danone to French dairy company Lactalis for $875 million, the organic yogurt maker has named GYK Antler, Manchester, NH, as its first agency of record. The independent agency, which had already worked on the Brown Cow brand, will now handle Stonyfield, Stonyfield YoBaby and Stonyfield YoKids as well……PepsiCo has begun a creative agency review for its flagship Pepsi brand. The only shops invited to participate, though, are from Omnicom Group. The assignment is currently at Omnicom’s BBDO....DDB Chicago has won the creative account for Miller Lite away from 180LA, three months after taking the digital business from DigitasLBi. DDB is the third Omnicom shop to get the creative account in three years. There’s lot’s of work ahead; Lite’s sales volume plummeted 5.4% in the four weeks ending July 1, says Beer Business Daily.Tuesday, July 18, 2017

CABLENET CHATTER The Great Food Truck Race returns Southern-style this summer to The Food Network. The high-stakes competition series will follow seven teams of food truck novices as they battle from New Orleans to Savannah for a $50,000 grand prize. Each team will show off their cooking chops, selling strategy, and business savvy in every city, with the least successful truck heading home each week. The grand prize will be awarded to the truck left standing and the end of the trip. The Great Food Truck Race premieres on The Food Network on Sunday, August 20th at 9 PM (ET), with the winner being named on the season finale on Sunday, September 24th at 9 PM (ET)……For the first time in series history, a woman will take over the lead in BBC One and BBC America’s hit series Doctor Who. Jodie Whittaker has been selected to take over for the departing Peter Capaldi as the 13th time Time Lord in the sci-fi classic. Whittaker was most recently seen in ITV’s Broadchurch whose creator is Chris Chiball, who takes over as showrunner for Doctor Who from Steven Moffat. In addition to the newly named female Time Lord, the next season is expected to usher in more changes as Moffat hands over the reins to Chiball. Up next for the series is a Christmas Special with also featured David Bradley as the First Doctor......The Walt Disney Company is expected to take steps in offsetting the cost of a shrinking subscriber base. The strategy will be to raise prices and tighten rules over how many subscribers can migrate to TV packages that exclude ESPN. The worldwide leader has struggled as expensive long-term contracts to broadcast sports kicked in just as subscribers were starting to flee. Disney is set to begin talks with cable operator Altice to renegotiate a renewal for a contract that expires this fall. The contract will be the first of a series of new deals Disney will negotiate with pay-TV providers in the coming months……The cast of Jersey Shore is coming together for a reunion of the MTV reality show. E! network will air the docuseries with the Jersey Shore cast in the pilot episode of Reunion Road Trip. The unscripted development project will feature a variety of casts each week with Jersey Shore as the only group currently lined up. Reunion Road trip will be executive produced by Simon Knight, Adam Greener, Emily Mayer and Lauren Stevens……The cast of the next season of Syfy’s The Expanse will feature Oscar nominee David Strathairn. The sci-fi drama is set 200 years in the future and follows the case of a missing young woman who brings a detective, played by Thomas Jane, and a ship’s captain together in a race across the solar system to expose the greatest conspiracy in human history. The Expanse is currently filming the third season in Toronto and is expected to premiere in 2018....Shooter star Ryan Phillippe broke his leg Sunday in an off-set accident that happened while his USA drama series is still in production on its upcoming second season that premiere’s tonight. “I was the victim of a freak accident during a family outing on Sunday. My leg is badly broken & required surgical attention, but I will make a full recovery, and will be back in action soon,” said Ryan.

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